* Dollar strength helps send oil lower
* U.S. gasoline futures sag late, weigh on crude futures
* December Brent crude edges up at contract expiration
* Coming up: API oil data at 4:30 p.m. EST Tuesday
(Recasts, updates with settlement prices and market
activity)
By Robert Gibbons
NEW YORK, Nov 15 (Reuters) - U.S. oil prices shed early
gains to end slightly lower on Monday, weighed down by extended
gains in the dollar on higher Treasury yields and a slide in
gasoline on speculation about a major refinery restart.
The late losses amid tepid trading volume and mixed
economic data deepened oil's 3.3 percent dive on Friday, when
anxiety over a possible Chinese interest rate rise triggered
the biggest commodities rout in a year and a half, pulling oil
off a 25-month high.
U.S. crude for December delivery <CLc1> fell 2 cents to
settle at $84.86 a barrel, retreating from a session high of
$85.77. In London, ICE expiring December Brent crude <LCOc1>
rose 36 cents to settle at $86.70 a barrel.
U.S. gasoline futures fell 1.49 cents to settle at $2.1950
a gallon, after reaching $2.2489 on speculation that
ConocoPhillips <COP.N> had restarted its
238,000-barrels-per-day Bayway refinery in Linden, New Jersey.
[]
Trading volume in gasoline was 105,300, near its 250-day
average, while crude oil and heating oil futures volumes lagged
about 22 and 44 percent, respectively, below their norms.
"Crude is trying to rebound after the drop on Friday, but
the stronger dollar is limiting the bounce as are concerns
about Europe and their effect on demand," said Phil Flynn,
analyst at PFGBest Research in Chicago.
The dollar index <.DXY> hit a six-week high as rising U.S.
bond yields boosted the appeal of U.S. assets and worries about
Ireland's debt crisis persisted. []
An early lift for oil also came from news Japan's economic
growth accelerated in the third quarter. []
A stronger dollar can weigh on oil prices because it
attracts investors away from dollar-denominated crude by making
oil more expensive for users of other currencies.
Gasoline took the spotlight on Monday after U.S. economic
data failed to give oil much impetus. Strong U.S. retail sales
were offset by data showing New York state manufacturing fell
to its lowest since April 2009. []
Gasoline inventories in the New York Harbor region,
delivery point for U.S. futures, have fallen, the "result of an
exceptionally heavy slate of ... refinery maintenance and the
labor-related curtailment of French refinery activity that has
curtailed U.S. imports", Jim Ritterbusch, president at
Ritterbusch & Associates, said in a research note.
Last week's late decline followed oil's break-out rally to
the highest prices since the midst of the financial crisis. As
crude oil jumped last week, money managers increased their net
long positions to a record 189,002 as of Nov. 9, data from the
Commodity Futures Trading Commission showed. []
PULLBACK
Amrita Sen, commodities analyst at Barclays Capital, said
the oil price drop was exaggerated and the steep fall not
justified by demand data.
The International Energy Agency on Friday raised its 2010
oil demand growth forecast on expectations of stronger demand
in China and industrialized economies. []
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For a graphic on 2011 and historical demand forecasts,
see:
http://graphics.thomsonreuters.com/F/11/CMD_LFRCST1110.gif
http://graphics.thomsonreuters.com/F/11/CMD_LFRCSTX1110.gif
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The U.S. Federal Reserve stimulus plan to buy $600 billion
in Treasury bonds to boost tepid economic growth lent support
to oil this month because the Fed action is expected to help
oil demand and weaken the dollar.
Though China's crude oil imports surged to a record high in
October, an accompanying jump in inflation had investors wary
of interest rate rises or more bank reserve requirement hikes.
Last week, the People's Bank of China surprised investors
by auctioning one-year bills in its open market operations at a
higher yield than the previous week, with traders saying the
move may mean Beijing could tighten monetary policy to ward off
too much liquidity in the system. []
Ahead of weekly inventory reports from industry and
government, a Reuters analyst survey on Monday forecast crude
stocks to have risen slightly last week, while gasoline and
distillate stockpiles were expected to be lower. []
(Additional reporting by Gene Ramos in New York, Emma Farge
and Isabel Coles in London, and Rebekah Kebede in Perth;
Editing by Dale Hudson)
